Institution for Mental Disease (IMD) Waiver Amendment Request

AHCCCS is requesting an amendment to the 1115 Research and Demonstration Waiver to seek a waiver of the Institution for Mental Disease (IMD) exclusion for all Medicaid beneficiaries aged 21-64, regardless of delivery system. The objective of this waiver is to maintain and enhance beneficiary access to behavioral health services in appropriate settings and ensure that individuals receive care in the facility most appropriate to their needs. Specifically, the waiver of the IMD exclusion would allow psychiatric facilities (i.e. hospitals, nursing facilities, or other institutions of more than 16 beds that are primarily engaged in providing diagnosis, treatment or care of persons with mental diseases, including medical attention, nursing care and related services) to be able to provide reimbursable services to Medicaid recipients for stays in excess of fifteen (15) days

AHCCCS is hosting community meetings across the state to provide the public with information about the upcoming Waiver submittal. These sessions will also provide the opportunity for AHCCCS to hear from stakeholders, including members and their families, advocates and providers.

Public Forum Locations Dates
Pima County Library
Lower Level 1 Meeting Room
101 N. Stone Ave. Tucson, AZ 85701
Date: February 14, 2017
Location: Tucson, Arizona
Time: 1:30 pm – 3:00 pm
AHCCCS—Gold Room,
701 E. Jefferson St, Phoenix, AZ 85034
Date: February 15, 2017
Location: Phoenix, Arizona
Time: 1:00 pm – 3:00 pm
Conference call-in number: 1-877-820-7831
Participant Passcode: 976852
Flagstaff AquaPlex
1702 N Fourth St, Flagstaff, AZ 86004
Date: February 16, 2017
Location: Flagstaff, Arizona
Time: 1:00 pm – 2:30 pm

The public will have the opportunity to review and comment on the proposal in person at public forums throughout the State and in writing via e-mail to or mail to:

c/o Office of Intergovernmental Relations
801 E. Jefferson Street, MD 4200
Phoenix, AZ 85034

All comments received by March 20, 2017, will be reviewed, considered and included in the final proposal sent to CMS.

CMS Responds to Request to Waive 15 Day Institutions for Mental Disease (IMD) Limitation

June 5, 2017
As of June 2, 2017, the Centers for Medicare and Medicaid Services (CMS) has indicated that currently there is only a path forward for an IMD waiver for individuals with substance use disorder needs, as part of a comprehensive state substance use disorder (SUD) strategy. AHCCCS will move forward with the submitting such comprehensive strategy, and will comply with the IMD provisions of the managed care regulations for individuals with non-SUD behavioral health conditions.

In the upcoming weeks, AHCCCS will revisit strategies identified by MCOs and providers to continue discussions related to compliance with this regulation.

IMD Waiver Request Submitted

April 12, 2017
Today, AHCCCS submitted to Centers for Medicare & Medicaid Services (CMS) a request for a waiver from restrictions on federal funding for services provided to Medicaid beneficiaries aged 21-64 who receive inpatient services in an Institution for Mental Disease, regardless of delivery system. With this approval, AHCCCS would maintain and enhance beneficiary access to behavioral health services.

15 Day Limitation Effective July 5, 2016 for Institutions for Mental Disease (IMD)

November 18, 2016
On July 05, 2016, a new Federal regulation from the Centers for Medicare and Medicaid Services (CMS) became effective which limits Federal funding for services to persons in IMDs who are aged 21-64. Federal Rule 42 C.F.R. 438.6(e) prohibits Federal Medicaid funding to Managed Care Organizations when members aged 21-64 are in IMDs for more than 15 days during a calendar month. AHCCCS understands the significant impact of this change and is collaborating with Managed Care Organizations to implement these changes. Managed Care Organizations are also working with providers to implement strategies which maximize continuity of care for members.

The new Federal regulation for IMDs:

  • Is limited to adults aged 21-64.
  • Eliminates the existing Federal authority which allows AHCCCS to utilize IMDs with no limits (referred to as the “in lieu” option).
  • Allows coverage for stays in an IMD so long as the stay is no longer than 15 days during a calendar month.
  • Requires AHCCCS to recoup the entire monthly payment made by AHCCCS to the member’s Managed Care Organization responsible for all care of the member when the member’s stay in the IMD is longer than 15 days during the month.
    • The recoupment of the entire monthly payment to the Managed Care Organization is required based on the member’s continued placement in the IMD after day 15 during a calendar month regardless of whether or not the Managed Care Organization pays the IMD.

What is an IMD?

  • Federal guidance provides that an IMD is a hospital, nursing facility, or other institution of more than 16 beds that is primarily engaged in providing diagnosis, treatment or care of persons with mental diseases, including medical attention, nursing care and related services. An institution for mental diseases is determined by its overall character as a facility that is established and maintained primarily for the care and treatment of individuals with mental diseases even if it is not licensed as an IMD. An institution for Individuals with Intellectual Disabilities is not an institution for mental diseases.
  • Federal regulation defines an “Institution” as “an establishment that furnishes (in single or multiple facilities) food, shelter, and some treatment or services to four or more persons unrelated to the proprietor.”
  • AHCCCS considers the following provider types to be IMDs at this time based on the federal regulation. This list is subject to change: